Stocks edged lower Friday afternoon even after August payrolls tripled economists' forecasts, as traders weighed the data's effect on the Federal Reserve's September rate decision instead of cheering the strong jobs number. The S&P 500, Nasdaq Composite, and Dow all posted small losses, while Apple and Tesla dragged on the major indexes for separate reasons.
The S&P 500 was down 0.4% as of 1:20 p.m. ET Friday. The Nasdaq Composite was down 0.3% and the Dow Jones Industrial Average was down 0.5% over the same span. The Dow had fallen as much as 0.7% around 11 a.m. ET before clawing most of it back. None of the 30 Dow stocks moved more than 2% in either direction, though 21 of them printed small moves in red ink.
A hot jobs report unsettles traders
Hot jobs reports are usually bad news for Wall Street, since investors worry about rising odds of inflation-fighting Fed rate increases. Economists had expected 53,000 payroll additions in August. Instead employers added 162,000 jobs, the strongest month since March. Unemployment held steady at 4.1%, and prior months were revised upward.
Yet the report was not a clear win. Average hourly earnings rose 3.1% from a year earlier, slightly above expectations but below July's 3.4% inflation reading, meaning wages are rising slower than prices. Traders responded by pricing in roughly 60% odds of a quarter-point rate increase at the Federal Reserve's September 15-16 meeting, and short-term Treasury yields rose sharply on the news.
Apple and Tesla weigh on the tape
Apple fell 2.1% and weighed on the S&P 500 and Nasdaq as its upcoming iPhone and MacBook lineup appears to face issues: the foldable iPhone is reportedly being produced at low volumes, and the company has canceled a tablet-like foldable MacBook. Memory chips are expensive and hard to find even in Apple's production pipeline. Micron Technology moved the other way, jumping after it said it plans to double production of its AI-focused High Bandwidth Memory in 2027.
Tesla shares fell 6.4% after its Cybercab robotaxi service went live in Austin, with early reviews ranging from polite to disappointed and federal safety regulators closely watching the driverless service. The drop erased Thursday's 7% jump.
Inflation data has the last word
A payroll number three times consensus barely moved rate-hike odds. Many traders are now bracing instead for next week's consumer and producer price reports, the last major inputs before the Fed's decision.
Source: The Motley Fool
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